Great Financing Flexibility For Owners

The assessment is not a loan and the C-PACE lender does not have the typical protections found in loans.

There are no remedies allowing debt acceleration. The total remaining assessment cannot be billed all at once to accelerate recovery.

There is only one protection for the C-PACE funder – the funder has a priority claim against the assessment, but only for the unpaid amount that has been billed in the normal course of business.

There are no ongoing compliance requirements such as quarterly reporting or debt covenants. The assessment survives bankruptcy, remains attached to the building and becomes an obligation of the new owner upon a sale (regardless of whether the sale is voluntary, or, required).

There should be no need for an inter-creditor agreement, a typical requirement when a borrower has two secured loans from different lenders.

Not only does an Inter-creditor Agreements slow a closing, but it can also complicate the ongoing flexibility of your business as there would be two lenders to deal with in debt compliance, amendments, waivers, etc…

The C-PACE funder will have a first lien on the billed, but uncollected portion of the assessment, which is often required in the enabling local legislation.

If your building is encumbered by secured debt, the lender will need to consent to the first lien on the assessment.

Download C-PACE for CFOs      Download C-PACE Application

Obtaining Lender Consent

As of January 2018, 167 institutions had granted C-PACE funders a first lien on the equipment. See Lender List as of Jan. 2018.

Those institutions include some of the largest in the world:

  • JP Morgan Chase
  • Bank of America
  • Wells Fargo
  • Bank of New York Mellon (as trustee)
  • Citibank

Very importantly, many regional and smaller local lenders have provided consents as indicated in the link below.

In the cases of Commercial Office Buildings, C-PACE increases NOI, enhancing the value of the mortgage lender’s collateral.

At any point in time, the C-PACE secure claim is exercisable in amounts that are very small relative to the overall claim of the primary secured lender.
The C-PACE payment claim runs only to the assessment that has been billed, but not paid for the relevant period.

In a 20-year financing, an annual bill is only 1/20th of the total assessment.


  • Assume the C-PACE assessment is $100k (ignore interest for simplicity);
  • Total amount financed is $2MM over 20 years;
  • Borrower pays taxes/assessment, in each of the first four years; and, in year 5, borrower files bankruptcy and has not paid that year’s property tax bill.
  • The C-PACE total claim against the estate is $1.6MM (initial amount of $2MM minus four $100k payments made to date).
  • The exercisable portion of the payment claim is only the amount that has been billed, but not paid.
  • Thus, the amount of the exercisable lien is $100k
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